Finance and Law Minister K.M. Mani has said that some of the policies adopted by the Central government had made the Budget-making process a big strain, forcing him to extend subsidies across sectors to cushion their impact on the common man.

Addressing a meet-the-press organised by the Kesari Memorial Journalists’ Trust here on Friday, the Finance Minister said the State government had to forego additional revenue on tax consequent to the increase in petrol and diesel prices, besides extending subsidy when the number of subsidised LPG cylinders was reduced. In the case of the KSRTC, the State government had sanctioned Rs.28 crore to the public utility to tide over the crisis forced on it after the oil companies classified it as bulk consumer. Another Rs.50 crore would have to be pumped into the corporation to meet its commitments, he added.

“Budget-making is a real strain this time. The State is going through a severe test. But the challenge of a Finance Minister is to find out ways to overcome such crises,” he said in reply to a question.

Mr. Mani said that despite an inflationary situation, he had been able to ensure higher capital expenditure and social security by paying pension amounts and expediting infrastructure development. He admitted that the inflation trends had affected physical achievements of the Plan targets, but there would be no shortfall in fiscal targets.

The capital expenditure was Rs.1,949 crore for 2012-13 as of December 31, 2012, when compared to the Rs.1,740 crore in 2011-12, he said. Tax revenues also had witnessed an upward movement, registering a growth rate of 23 per cent.

The Finance Minister was also critical about Centre-sponsored schemes, which encroached upon the State powers enlisted in the Seventh Schedule of the Constitution.

Instead of formulating schemes that were unsuitable to the respective States, the Centre should devolve funds to the State as additional Central Assistance or Plan assistance and give them the freedom to prioritise spending, he said in reply to a question of the State’s inability to utilise some of the Centrally sponsored Schemes.